Error can cause financial problems for unsuspecting Canadians

By Jason Fekete, Postmedia NewsJanuary 10, 2014

OTTAWA — The federal taxpayers’ ombudsman says the Canada Revenue Agency does, indeed, have a “systemic issue” with taxpayers wrongfully declared dead, even though the CRA says that determination has not yet been made.

In an interview Thursday with Postmedia News, federal taxpayers’ ombudsman Paul Dube, said his office has nearly completed a special report with recommendations for government, that will be publicly released, on the issue of taxpayers wrongfully declared deceased.

His office found the issue, while only happening in a relatively small number of cases, has been raised enough times and has potential to cause financial and emotional hardship that it should be considered systemic for the Canada Revenue Agency.

“We found that to be a systemic issue,” Dube said. “The impact, when it does happen, can be quite significant on an individual, on a taxpayer.”

His office says a systemic issue is one that if not quickly identified and properly addressed, has the potential to recur and have a negative impact on taxpayers.

When someone is wrongfully declared dead, bank accounts can be closed and payments from governments and other entities suspended, possibly causing financial problems for unsuspecting Canadians, he said.

For example, once a date of death or “deceased code” at CRA has been put on a person’s account, benefits are halted immediately, so a person could lose their Canada Child Tax Benefit or GST credit, and only realize the problem once the payment doesn’t show up.

However, there’s also an “emotional impact of being declared dead by a government agency,” he said, while an individual and family members face another headache of jumping through bureaucratic hoops to ensure the error is corrected.

“We’re really keen to get to the bottom of why this happens and find out if there’s a way that we can make feasible recommendations to reduce the instances of this happening,” Dubé added.

Secret briefing notes provided to new Revenue Minister Kerry-Lynne Findlay as part of last July’s cabinet shuffle, and obtained by Postmedia News using access to information legislation, said a handful “systemic issues” were being reviewed by the CRA, including “taxpayers wrongfully declared deceased.”

But earlier this week, the CRA said it had not yet been determined whether the issue of taxpayers wrongfully being declared dead was, in fact, a systemic issue, and said it awaited the ombudsman’s report.

The tax collection agency acknowledged errors are made “occasionally” with taxpayer death notifications. Of the more than 380,000 total deaths reported to the CRA in 2012, errors occurred in 0.1 per cent of the cases (about 380), the agency said.

Dube said that while his office has received its own complaints on the issue, he’s relying on CRA data for the actual number of taxpayers wrongfully declared dead.

The CRA has already taken some steps to correct the problem, he said, while noting it’s not always the agency’s fault.

The CRA is sometimes fed incorrect data from vital statistics offices in the provinces and the mistake is simply passed on to the federal agency.

Other times, it can be human error by taxpayers where they put the wrong information on tax forms for themselves and a deceased spouse. Other times, simple keystroke errors are made at the CRA.

Employees at the CRA would sometimes use two screens with files on two different taxpayers, but enter a deceased code on the wrong file, he said.

The taxpayers’ ombudsman is a special adviser to the minister of national revenue, but operates at arm’s length from the government. For Canadians, the ombudsman’s job is to uphold taxpayer rights and provide an independent and impartial review of unresolved complaints from taxpayers about service or treatment they have received from the Canada Revenue Agency.

Story Tools

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the "X" in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.